By: Lykke E. Andersen*
In an attempt to deal with the threat of climate change, many development banks and development institutions have established considerable budgets in support of climate change mitigation and adaptation projects in addition to their usual development projects. For example, the Inter-American Development Bank (IDB) is aiming for 25% of their lending portfolio to be destined to climate change and sustainable development projects by 2015.
There is a concern, however, that these climate change projects may not be truly additional, compared to the business-as-usual scenario, but may just represent a renaming of already existing projects (compare panels (i) and (ii) of Figure 1), or worse, that the climate change projects are actually diverting funds away from development projects to the detriment of the poor (panel (iii)).